[Rain72]

12% of income during working years is now going to superannuation. No wonder people can't afford a home. The current rules are thoroughly stupid. Everyone should be able to use their super (if they can show need) to acquire a very modest first home or a home to replace one lost in a crisis or trauma - potentially borrowing from their own super with a requirement to repay the fund down the track if their financial situation permits.

The argument that super is for retirement does not stack up when you consider that a home of one's own is a far better asset than extra super in retirement. If couples could put a deposit on a home, they would be paying off an asset instead of lining a landlord's pockets. Over time, as rents rise, repayments and costs of ownership would reduce as a percentage of income, allowing for higher contributions to super. Eventually, the house would be paid off and there would be no rent to pay in retirement. Even a few hundred thousand less in super would not matter (though it's likely many would end up with just as much super thanks to the benefit of not paying rent for decades). The house would likely be worth many, many times its cost and could be downsized or a reverse mortgage taken to supplement super income if necessary.

People with significant super and no home might well spend their super on a house at retirement, paying 10+ times what it would have cost them earlier in life and blowing much of their super. How does that make any sense.

I struggle to understand the ridiculous logic behind the current laws, but I guess they are driving us toward the 'you will own nothing and be happy' goal conspiracy theorists put forward.

Thankfully, I own my home. I was conditioned, from a very early age, to believe home ownership was the first and most important financial priority in life and every cent I could manage should go towards it until that goal was achieved .

 

[mylittletibbies]

12% of income during working years is now going to superannuation. No wonder people can't afford a home. The current rules are thoroughly stupid. Everyone should be able to use their super (if they can show need) to acquire a very modest first home or a home to replace one lost in a crisis or trauma - potentially borrowing from their own super with a requirement to repay the fund down the track if their financial situation permits.

The argument that super is for retirement does not stack up when you consider that a home of one's own is a far better asset than extra super in retirement. If couples could put a deposit on a home, they would be paying off an asset instead of lining a landlord's pockets. Over time, as rents rise, repayments and costs of ownership would reduce as a percentage of income, allowing for higher contributions to super. Eventually, the house would be paid off and there would be no rent to pay in retirement. Even a few hundred thousand less in super would not matter (though it's likely many would end up with just as much super thanks to the benefit of not paying rent for decades). The house would likely be worth many, many times its cost and could be downsized or a reverse mortgage taken to supplement super income if necessary.

People with significant super and no home might well spend their super on a house at retirement, paying 10+ times what it would have cost them earlier in life and blowing much of their super. How does that make any sense.

I struggle to understand the ridiculous logic behind the current laws, but I guess they are driving us toward the 'you will own nothing and be happy' goal conspiracy theorists put forward.

Thankfully, I own my home. I was conditioned, from a very early age, to believe home ownership was the first and most important financial priority in life and every cent I could manage should go towards it until that goal was achieved .

I totally agree with a lot you said.
Through hard work and saving I have owned my own home since my late 40s.

The only statement that most people seem to forget is that the 12% superannuation is being paid by their employers, not them.
I was in business when superannuation was first considered.
I quickly realised that as a "small" business owner I could not possibly afford, or pass on, this additional increase in myemployees wages and had to close down my business.
Yes, I realise that it appears to the workers that this money is coming out of their salary, but that is not so. Every time super goes up it does not come out of your salary,but is an extra cost to your employer.
This super was bought in to fund retirement, not for the boss to contribute to their employees ability to be able to buy a home.
How this generation is going to afford a home is beyond me.
Our generation were happy to start off with an older, smaller home. Hang sheets on the windows.buy 2nd hand furniture, drive an old jalopy. Even work two or three jobs.
Unfortunately a large percentage of today's young want to start off where their parents have finished.
Nothing smaller than a 4x2, theatre room, very minimum 2 bathrooms, a powder room, butlers pantry, pool.
They are in debt for expensive cars, mobile phones, computers, internet costs, streaming services.
All these things are viewed as necessities.
Until they can learn to differentiate between their needs and their wants nothing will change.
House prices are way too high with not much likelihood of them coming down any time soon.
They need to start building more 3x1 basic modular homes for young couples, who need to lower their expectations and gradually build up to their dream home as previous generations did.
And leave their superannuation alone, because, as we all know, they are going to need it one day.

 

[Rain72]

I certainly agree with your comments about wants vs needs. But I cannot agree with your comments about super. It IS the employee's money. Super is ultimately part of a salary package. The more super the employer pays, the less wages he can afford to pay. Conversely, the less super he has to contribute, the higher the wage he can afford to offer.

Furthermore, when super was introduced, there was a tradeoff agreed with unions and award-wage-fixing authorities that wage rises that were in the pipeline would be sacrificed for super. It was a very definite and defined trade-off. And it's still happening. Employers are arguing against pay rises because they have to pay more super.

Yes, people are going to need super one day - but they will need a great deal LESS if they are able to buy a home. That was my point. Even full pensioners with very little super or other assets are doing okay if they own their home. Conversely, I know people with close to $1 mil in super and there is no way they could afford to pay rent and live in reasonable comfort. Take out their personal assets, and a couple is likely to only have around $800K to be denied a pension. That might conceivably return $40,000 a year or less - considerably less than the aged pension, especially when you consider the concessions pensioners receive. All their super is doing, really, is saving the taxpayer until they drain a lot of it and put their hand out. It isn't benefiting them much at all, because without it they would have a higher fortnightly income. A renter gets extra assistance on the pension, but the couple living on their super do not. So ultimately they are far worse off with the extra super and no home.

 

[Noon]

Why is it so important to own your own home, we did both. Renting again, have a good Landlord, & all we do is pay him rent & any water excesses. Any maintenance he fixes it. We're lucky, I know that, we have contents insurance, he does the House Insurance

 

[Catherines]

I totally agree with a lot you said.
Through hard work and saving I have owned my own home since my late 40s.

The only statement that most people seem to forget is that the 12% superannuation is being paid by their employers, not them.
I was in business when superannuation was first considered.
I quickly realised that as a "small" business owner I could not possibly afford, or pass on, this additional increase in myemployees wages and had to close down my business.
Yes, I realise that it appears to the workers that this money is coming out of their salary, but that is not so. Every time super goes up it does not come out of your salary,but is an extra cost to your employer.
This super was bought in to fund retirement, not for the boss to contribute to their employees ability to be able to buy a home.
How this generation is going to afford a home is beyond me.
Our generation were happy to start off with an older, smaller home. Hang sheets on the windows.buy 2nd hand furniture, drive an old jalopy. Even work two or three jobs.
Unfortunately a large percentage of today's young want to start off where their parents have finished.
Nothing smaller than a 4x2, theatre room, very minimum 2 bathrooms, a powder room, butlers pantry, pool.
They are in debt for expensive cars, mobile phones, computers, internet costs, streaming services.
All these things are viewed as necessities.
Until they can learn to differentiate between their needs and their wants nothing will change.
House prices are way too high with not much likelihood of them coming down any time soon.
They need to start building more 3x1 basic modular homes for young couples, who need to lower their expectations and gradually build up to their dream home as previous generations did.
And leave their superannuation alone, because, as we all know, they are going to need it one day.

I agree with your comments. Seems these days it is about WANT not NEED. Seems they must have everything from day one.

We were paying 17% interest on our home loan when we paid off our first home in 1982 and the money came only from my husband’s wage, as did living costs and provision for three children, as I didn’t go back to work for quite a few years. We lived without a dining table (sat at the breakfast bar attached to a small kitchen and ate after the children had finished) for many years and no floor covering other than polished floors. From there we sold for just $148,000 and bought a block of land on which we had a 4-bedroom home built. That home was fully paid for on completion in spite of renting for six months during construction. Today we don’t owe a soul one cent as everything we have we waited to buy when we had the cash.

My eldest son (57) now fully owns his own home on the Sunshine Coast. Number 2 (54) has very little, but what he has is all his and daughter (now 50 and legally divorced) is presently dealing with getting 60% of ex-husband’s finances (including from his super) which included her percentage share of their newly constructed home which she only had 5 months to enjoy before the cheating husband was found out. She is now considering her future life.

We all can only suggest things to our children but cannot force them to do what we believe is right. The children we all bring up these days can only follow our tried and tested way or go their own way. However, I think this current generation’s attitude of having everything from day one needs a serious re-think by them and that might get them thinking about their wants and spending which may perhaps result in a little savings. Landlords also need to re-think their high rental burden on young people with many landlords having multiple properties.

 

[Rain72]

Why is it so important to own your own home, we did both. Renting again, have a good Landlord, & all we do is pay him rent & any water excesses. Any maintenance he fixes it. We're lucky, I know that, we have contents insurance, he does the House Insurance

Rent has become unaffordable for many. Many don't have a good landlord. I would struggle with the insecurity of renting - knowing at any time I might have to find alternate accommodation. I would hate not being able to develop a garden and fruit orchard that I could be sure I could enjoy for many years to come. I would also struggle with not being able to make changes to the home to suit my specific needs and preferences. I have rented. As a stop-gap measure while saving for a home and later while waiting for a new home to be constructed, it was fine. I would not want to do it long term and I can readily understand why it's important to many to own. But to each his own. Circumstances differ and so do preferences.

 

[mylittletibbies]

I certainly agree with your comments about wants vs needs. But I cannot agree with your comments about super. It IS the employee's money. Super is ultimately part of a salary package. The more super the employer pays, the less wages he can afford to pay. Conversely, the less super he has to contribute, the higher the wage he can afford to offer.

Furthermore, when super was introduced, there was a tradeoff agreed with unions and award-wage-fixing authorities that wage rises that were in the pipeline would be sacrificed for super. It was a very definite and defined trade-off. And it's still happening. Employers are arguing against pay rises because they have to pay more super.

Yes, people are going to need super one day - but they will need a great deal LESS if they are able to buy a home. That was my point. Even full pensioners with very little super or other assets are doing okay if they own their home. Conversely, I know people with close to $1 mil in super and there is no way they could afford to pay rent and live in reasonable comfort. Take out their personal assets, and a couple is likely to only have around $800K to be denied a pension. That might conceivably return $40,000 a year or less - considerably less than the aged pension, especially when you consider the concessions pensioners receive. All their super is doing, really, is saving the taxpayer until they drain a lot of it and put their hand out. It isn't benefiting them much at all, because without it they would have a higher fortnightly income. A renter gets extra assistance on the pension, but the couple living on their super do not. So ultimately they are far worse off with the extra super and no home.

I don't know where you worked, but there were definitely no union trade offs etc for people on the basic wage or unskilled labour. Yes people on salary packages have their super included in their wages, but that isn't everyone. And most people on salary packages earn reasonable money and with a little bit of belt tightening and saving should be able to afford a home. Most families have two wages coming in these days.
The age pension is $30646/annum. I don't know where you get almost $10,000 worth of concessions from., we wish.
If they are far worse off with the extra super and no home then why not buy a home or a unit. If you had $200,000 worth of assets, I would say you are pretty stupid not to have bought a home considering assets are only costed at 2nd hand value. Obviously those people would have bought a lot of wants instead of needs. More fool them.

If you bother to do some research you will find the following.
"In 1992 the Super Guarantee Legislation was introduced making it compulsory for EMPLOYERS to pay super contributions for their employees.

Under the Super Guarantee, EMPLOYERS have to pay contributions to the value of 12%of the employees ordinary time, not including overtime.
IT IS IMPORTANT TO REMEMBER THAT THE COMPULSORY SUPERANNUATION CONTRIBUTION DOES NOT COME OUT OF YOUR PAY IT IS AN EXTRA PAYMENT MADE BY YOUR EMPLOYER ON YOUR BEHALF" END QUOTE.

The only thing Unions, in current days, have done is push wages up which has achieved nothing as the costs are just passed on and everything is dearer.
The only thing they have achieved is to make us uncompetitive in the world market and priced us out.

 

[Aquired Taste]

We used to have a home mortgage but we got divorced. My child support was $1200 per month for 12 years and so at 77 still rent. To pay the rent I have to keep working. The rent is reaching a point, its gone up 25% over the past 18 months, where I need to look elsewhere, away from my family and friends. On yer Albo, keep importing more people and building less homes to accommodate them. That will ensure that I will be working into my 80s or living in the car. Cheers.

 

[Rain72]

I don't know where you worked, but there were definitely no union trade offs etc for people on the basic wage or unskilled labour. Yes people on salary packages have their super included in their wages, but that isn't everyone. And most people on salary packages earn reasonable money and with a little bit of belt tightening and saving should be able to afford a home. Most families have two wages coming in these days.
The age pension is $30646/annum. I don't know where you get almost $10,000 worth of concessions from., we wish.
If they are far worse off with the extra super and no home then why not buy a home or a unit. If you had $200,000 worth of assets, I would say you are pretty stupid not to have bought a home considering assets are only costed at 2nd hand value. Obviously those people would have bought a lot of wants instead of needs. More fool them.

If you bother to do some research you will find the following.
"In 1992 the Super Guarantee Legislation was introduced making it compulsory for EMPLOYERS to pay super contributions for their employees.

Under the Super Guarantee, EMPLOYERS have to pay contributions to the value of 12%of the employees ordinary time, not including overtime.
IT IS IMPORTANT TO REMEMBER THAT THE COMPULSORY SUPERANNUATION CONTRIBUTION DOES NOT COME OUT OF YOUR PAY IT IS AN EXTRA PAYMENT MADE BY YOUR EMPLOYER ON YOUR BEHALF" END QUOTE.

The only thing Unions, in current days, have done is push wages up which has achieved nothing as the costs are just passed on and everything is dearer.
The only thing they have achieved is to make us uncompetitive in the world market and priced us out.

Sorry, but you are incorrect.

"Superannuation's introduction in Australia in 1992, the Superannuation Guarantee (SG),was a significant policy shift where employers were legally required to contribute a percentage of their employees' wages into a retirement fund. This compulsory system arose from a deal between the Australian Council of Trade Unions (ACTU) and the Hawke government to exchange lower initial pay rises for the promise of universal superannuation, which was seen as a way to provide income in retirement for all workers. The SG was enacted by the Superannuation Guarantee (Administration) Act 1992 and has gradually increased from an initial rate of 3% to the current 12%."

Note the words 'deal between.... to exchange lower initial pay rises....

Furthermore, plain common sense says if you pay more into one basket you can't pay as much into the other. No matter what unions do, employers have only $X dollars to pay employees and the more they put into super the less they have left to pay in direct wages. I agree that unions constantly push for higher wages, and that certainly leads to higher costs. But employers can't just put prices up every time their costs increase. That results in push back from buyers. Some employers have more scope to put prices up than others, but there are limits. Ultimately, they have to manage their outgoings, and that means paying less in wages if they pay more in super. That's just plain common sense - and Economics 101.

 

[mylittletibbies]

Sorry, but you are incorrect.

"Superannuation's introduction in Australia in 1992, the Superannuation Guarantee (SG),was a significant policy shift where employers were legally required to contribute a percentage of their employees' wages into a retirement fund. This compulsory system arose from a deal between the Australian Council of Trade Unions (ACTU) and the Hawke government to exchange lower initial pay rises for the promise of universal superannuation, which was seen as a way to provide income in retirement for all workers. The SG was enacted by the Superannuation Guarantee (Administration) Act 1992 and has gradually increased from an initial rate of 3% to the current 12%."

Note the words 'deal between.... to exchange lower initial pay rises....

Furthermore, plain common sense says if you pay more into one basket you can't pay as much into the other. No matter what unions do, employers have only $X dollars to pay employees and the more they put into super the less they have left to pay in direct wages. I agree that unions constantly push for higher wages, and that certainly leads to higher costs. But employers can't just put prices up every time their costs increase. That results in push back from buyers. Some employers have more scope to put prices up than others, but there are limits. Ultimately, they have to manage their outgoings, and that means paying less in wages if they pay more in super. That's just plain common sense - and Economics 101.

Exactly, employers can't keep putting prices up because buyers won't cop them, so I guess as an employee you think the employer should just "eat them".
In this country we have an incredible amount of unproductive hours that the employer has to cost into his pricing that employees give no thought to, until if some day they become employers.

On top of four weeks holiday pay many employees still get 17.5% loading.
17.5% more pay for doing nothing.
When I had my business it was universal so I had to pay it for all my employees.

We have 2 weeks sick pay, which most workers take, whether they are sick or not. They think they are "entitled" to it.
Then they complain if they're not getting paid when they really are sick because they've already used their days up.
It's absolutely amazing how many people get sick 10 working days every year. No more, no less.

Maternity leave. Which has just been increased. This leaves the employer in most cases having to hire temporary staff, through an agency, at about 50% extra cost.

Australia has the 4th largest pension globally and is expected to rise to the 2nd highest, only behind USA. An increase which is driven by our superannuation guarantee.I don't mean the age pension which is paid by the government, which is woefully inadequate, I am talking about super.

More and more small businesses keep closing down as they can't cover these costs.
Drs can't bulk bill because of the high costs of running a surgery which the government doesn't cover them adequately for.
Over the last years of running our renovation business my husband and I deliberately took the decision not to expand our business just because it was so much easier than employing people and having all the expenses and hassles and I know many people who have done the same It is not worth trying to run a small business in Australia, unless it is just something you can run as a family abd don't have to employ staff.

 

[Rain72]

Exactly, employers can't keep putting prices up because buyers won't cop them, so I guess as an employee you think the employer should just "eat them".
In this country we have an incredible amount of unproductive hours that the employer has to cost into his pricing that employees give no thought to, until if some day they become employers.

On top of four weeks holiday pay many employees still get 17.5% loading.
17.5% more pay for doing nothing.
When I had my business it was universal so I had to pay it for all my employees.

We have 2 weeks sick pay, which most workers take, whether they are sick or not. They think they are "entitled" to it.
Then they complain if they're not getting paid when they really are sick because they've already used their days up.
It's absolutely amazing how many people get sick 10 working days every year. No more, no less.

Maternity leave. Which has just been increased. This leaves the employer in most cases having to hire temporary staff, through an agency, at about 50% extra cost.

Australia has the 4th largest pension globally and is expected to rise to the 2nd highest, only behind USA. An increase which is driven by our superannuation guarantee.I don't mean the age pension which is paid by the government, which is woefully inadequate, I am talking about super.

More and more small businesses keep closing down as they can't cover these costs.
Drs can't bulk bill because of the high costs of running a surgery which the government doesn't cover them adequately for.
Over the last years of running our renovation business my husband and I deliberately took the decision not to expand our business just because it was so much easier than employing people and having all the expenses and hassles and I know many people who have done the same It is not worth trying to run a small business in Australia, unless it is just something you can run as a family abd don't have to employ staff.

 

[Rain72]

Mate, I don't know where you got the idea that I am or was an employee? I am retired, but for most of my working life I ran my own business, started from scratch on the kitchen table with nothing and built with 80 hour weeks living on the bread line while I paid other people and copped all the extra costs of employing people who sometimes worked and more often than not did not even try to earn their pay.

I agree with you about the cost of employing people and the ridiculous benefits paid and the attitude of so many employees being the reasons this country is unproductive.
But I was discussing SUPERANNUATION and HOUSING. And it is a fact of history that a deal was done to REDUCE wage increases in order to implement compulsory superannuation for all. And it IS a fact that doing that has made it harder for workers to save for a home, which would be of far greater value to them in retirement than extra dollars in super - because now 12% of the wage the employer pays is not going into the worker's pocket and isn't available to use until age 60+. And to some extent that's a good thing, but in so far as it prevents people buying a home of their own, it isn't.